BorgWarner Inc. executives are expecting a boom in the electrification business but not before e-products put some strain on its profitability.

The supplier saw first-quarter sales of $4.2 billion, up 8 percent from a year ago, and net earnings of $230 million, about flat with last year, according to its earnings report Thursday.

While the company increased its sales and earnings projections for the full year, its first-quarter profit results came in just shy of Wall Street expectations, due to inflated costs, high R&D spending on electrification and sagging sales in China, which is also hurting other suppliers with high exposure to the Far East.

“We outperformed the market both in Europe and North America,” CEO Frederic Lissalde said on a call with investment analysts. “As we expected going into the quarter, our margin performance was negatively impacted by our planned e-R&D investment, net inflationary costs and the impact of low production in China.”

BorgWarner, known for its turbochargers, has been working the last few years to shed ties to the internal combustion engine and recast itself as a leading supplier of inverters, batteries and other EV components. To that end, the spin-off of its fuel systems and aftermarket segments — to be renamed Phinia — is expected to be complete by the end of the third quarter.

The supplier expects EV-related sales in 2023 to double from last year with between $1.5 billion and $1.8 billion in revenue.

Its adjusted net earnings were $1.09 per diluted share, 2 cents off analysts’ mark.

BorgWarner shares (NYSE: BWA) slipped 7.9 percent to close at $42.80 on Thursday.

The company generated $278 million of capital expenditures for the quarter, compared with $177 million the year prior, according to its 8-K quarterly report to the Securities and Exchange Commission.

In addition to R&D expenditure and the sluggish performance of one of its primary markets, increased costs dragged down the bottom line. BorgWarner reported about $28 million of inflationary costs in the first quarter and said it expects a $65 million costs headwind for the full year.

On its path to generate $4 billion of EV sales by 2025, BorgWarner has made significant capital expenses related to its EV business in the past few months. In April, it announced a $42 million expansion of its Seneca, S.C., battery plant., and a month before that, the company said it would invest $20.6 million and create 186 jobs in metro Detroit.

BorgWarner, based in suburban Detroit, is projecting full-year sales of between $17.1 billion and $17.9 billion, slightly higher than its prior guidance and up from the $15.8 billion it made in 2022.